Has the hefty 2021 federal budget done enough? Reckon CEO weighs in
Major spending on skills and hefty asset write-offs and loss carry-back schemes are key wins for SME owners in the 2021 federal budget.
Major spending on skills and hefty asset write-offs and loss carry-back schemes are key wins for SME owners in the 2021 federal budget.
The federal budget’s tax cut extensions and investment in training programs has “hit the mark” for small business owners, according to Sam Allert, CEO of accounting software provider Reckon.
“They have spent up big. SMEs wanted a tax break, they wanted reduced red tape. They wanted investment in skills training, and they wanted more digital incentives — so there’s a lot of green shoots in the budget,” Allert tells SmartCompany.
Thankfully, the budget has invested in the areas most SMEs wanted to prioritise. In a pre-budget SmartCompany survey of SME owners:
- 46% wanted to see a focus on skills and training,
- 41% wanted to see support for women in the workforce, and
- 39% wanted the budget to prioritise tax reform.
With more than $29 billion in temporary business and personal income tax cuts, changes to the superannuation guarantee that will benefit women, $42.4 million to encourage women into STEM, and investment in skills and training programs, this budget does not shy away from spending money in the hopes of creating jobs and economic recovery.
The opportunity for small businesses now lies in their ability to leverage the proffered tax cuts — and Australia’s fortunate position of COVID-19 recovery — to embrace digital transformation.
Budget prioritises digital transformation
“In Australia, we’re in a fortunate recovery position coming out of COVID-19. We’ve got the highest economic growth rate of advanced economies around the world, and that provides an opportunity for small business,” Allert observes.
With business confidence hitting a seven year high, 65% of business owners think that there are good times ahead over the next 12 months.
To take advantage of this industry confidence, Allert says businesses need to adopt a digital-first mindset and re-evaluate their business models.
“I think that COVID-19 lockdowns have enabled us to look at new business models and modes of operation,” he says.
“Every business, small and large, needs to have an eye on digital. What we saw going into COVID-19 was businesses that were already digital and had invested in technology were ready with up-to-date systems, meaning they could access relevant data.”
“It was those businesses that not only survived, but thrived through COVID-19.”
Lean on your advisors
The budget’s hefty tax cut extensions will be welcome news for the many small businesses still recovering following last year’s lockdowns.
The temporary loss carry-back scheme which was first introduced in the 2020 budget has been extended for another 12 months. The scheme is designed to provide temporary cashflow support to companies that are operating in a tax loss position.
SMEs will also be able to deduct the full cost of all new assets for another year, a marked increase from the previous $20,000 cap.
To make the most of the opportunities these tax breaks offer, Allert recommends SMEs seek expert advice.
“I would suggest particularly with the tax cuts and incentives introduced by the government, SMEs should make sure to engage with advisors like their accountants and bookkeepers,”
“They’ll benefit from cashflow forecasting, debt reduction, budgeting, and maximising tax benefits from this year’s budget.”
Coming up short on skills gaps
Digital skills are a focus for this year’s budget, with $10.7m allocated towards a digital skills cadetship, and four industry-led training programs designed to fill the skills gaps in the economy.
SMEs can be reimbursed for the wages of new apprentices and trainees by up to 50% under the government’s $2.7 billion Boosting Apprenticeship Commencements wage subsidy program.
While the budget’s focus on incentivising apprenticeships and training programs will upskill more people, it still won’t solve Australia’s looming skills shortage.
“There’s no doubt it will help. But will it help enough? I don’t think so,” Allert says.
With delayed vaccine rollouts and COVID-19 outbreaks closing Australia’s borders to skilled immigrants until at least mid-2022, SME owners are missing out on vital skills.
“I love that the government is investing in skills and training, but we’re going to need more because we’re not getting those skilled immigrants coming in,” Allert says.
